Newcastle United are in a 'much stronger' position to strengthen this summer as the Magpies attempt to sign James Trafford, Anthony Elanga and Joao Pedro but the club won't overpay
Newcastle United boss Eddie Howe, Steve Nickson and Andy Howe and Alexander Isak and Anthony Elanga
Newcastle United boss Eddie Howe, Steve Nickson and Andy Howe and Alexander Isak and Anthony Elanga
June 30 looks set to be a little less frantic this time around. Whereas Newcastle United were dashing to raise funds through player sales a year ago, the Magpies have spent the final days of the current financial year working on incomings.
The wait for a breakthrough goes on, but Newcastle have greater scope to recruit moving forward following a couple of profitable windows and some heavy losses dropping out of the club's PSR equation.
Hence why Newcastle are in a 'much stronger position' in the words of Kieran Maguire. That's certainly how fellow football finance expert Professor Rob Wilson also sees it going into the next three-year cycle.
"Getting rid of those losses on your PSR calculations is significant and also provides them with a lot more flexibility in terms of what they want to do," he told ChronicleLive after Newcastle previously posted deficits of £73.4m and £70.7m in 2022-23 and 2021-22 respectively.
"They are going to be generating something in the region of €80m-plus just from the Champions League. That's significant because it's all revenue that's going to be added to the bottom line.
"Their operational costs are being benchmarked against a Premier League set of revenues so as soon as you get the Champions League money in, it allows you to be much more aggressive in the transfer market whereas other teams, like Aston Villa, are worried about it."
Brighton's Joao Pedro (left) and Anthony Elanga of Nottingham Forest
Brighton's Joao Pedro (left) and Anthony Elanga of Nottingham Forest
However, there is a reason why Newcastle will not simply pay whatever it takes to get James Trafford, Anthony Elanga and Joao Pedro through the door.
Newcastle never want to be in the desperate position they were in a year ago and the club will have to be smart in order to strengthen a number of positions this summer.
Premier League proven players command a premium, after all, and former owner Mehrdad Ghodoussi had first-hand experience of clubs adding another 20% to 'whatever the fair market value is' in talks.
Although the penny has long since dropped that Newcastle are not, in fact, the richest club in the world, the black-and-whites are still going to have to be careful negotiators as Maguire explained.
"They have certainly got far more capacity than the last two summers," he told ChronicleLive. "It's then a case of not falling into a trap of spending for spending's sake and I don't think that is the culture at Newcastle.
"I think they're using the Saudi tax argument as a means of just trying to dampen down the expectations among people saying, 'You are the richest people in the world. Why have you not spent a lot more money?' It's more of an expectations management issue than anything else."
Newcastle United head of recruitment Steve Nickson with Antonio Cordero
Newcastle United head of recruitment Steve Nickson with Antonio Cordero
When it comes to valuations, the benchmark has been set elsewhere in the opening weeks of the window after Manchester United activated Matheus Cunha's £62.5m release clause and Liverpool spent £116m on Florian Wirtz. As far as Wilson is concerned, those early deals have been 'quite disruptive to the market'.
Newcastle will have to navigate this market without a sporting director following Paul Mitchell's departure, but leading recruitment figures Steve Nickson and Andy Howe remain heavily involved alongside CEO Darren Eales.
Eddie Howe said Nickson was 'very important to me and the coaching team' while Andy Howe was 'absolutely prominent' in the signing of key players like Bruno Guimaraes, Sandro Tonali, Anthony Gordon and Tino Livramento.
Nickson, who has scouted key players and flown out to help finalise a number of big-money deals over the years, has vast experience in negotiations as well as identifying talent.
Wilson has got an insight into how Nickson operates after Newcastle's head of recruitment previously completed a Masters in sports directorship at VSI Executive Education.
"His recruitment record is exceptional," he said. "He knows the market inside, out and is a thoroughly good guy. He understands the club, the culture, the environment and the area. He still stands out as one of the best operators."
Alexander Isak
Alexander Isak
As well as bringing new players in, Newcastle also want to keep hold of their prized assets and after handing new deals to Bruno Guimaraes, Joelinton and Anthony Gordon in the last 20 months, Alexander Isak is next in line for fresh terms.
Newcastle are already in a strong position - Isak still has three years left on his deal - but agreeing a fresh contract with the striker in the coming months would be a statement in itself.
"That's the sort of contract that needs to get tied down," Wilson said. "Good number nines are rare as most teams are finding. Arsenal are clearly struggling. Manchester United have not brought one in.
"It's a bit of a crown jewel when you have one and they will do everything they can to retain him because he's very difficult to replace. A new contract could be worth its weight in gold."
Such a deal would have a knock-on effect on Newcastle's PSR situation given the club's tight wage structure. Seven top-flight sides spent more on salaries in clubs' last set of published accounts and the challenge going forward will be turbocharging revenues to enable Newcastle to have greater headroom in that regard. That's why the club's next move with St James' Park is so important alongside continued commercial growth.
"Under Mike Ashley, they were generating £28m-a-year in commercial revenue," Maguire added. "That's less than one-tenth of the commercial revenue of Manchester City.
St James' Park
St James' Park
"Under PIF, commercial revenue has tripled in the space of three or four years but they're still playing catch up and that reflects the fact that Newcastle are not a global brand. That's not being critical. You go overseas and look at the shirts that you see - it's Real Madrid, Liverpool and Manchester United.
"Manchester United are also generating £130m-plus from an existing Old Trafford. Spurs are generating around the same. Even though it's a smaller stadium, the average price point is that much higher and they have a greater proportion of tickets that are hospitality.
"If Newcastle stay at St James' Park - even an expanded St James' Park - they are still going to be far behind those clubs. If you start each season so far behind those clubs in a PSR environment, that makes life that much more difficult."